Classic old-school TDD recommends refactoring as part of every cycle -- red, green, refactor. In fact, it recommends refactoring mercilessly. Relentlessly. To succeed at classic TDD, you have to be some kind of refactoring maniac!
Refactoring maniacs are an endangered species, but you're in luck: we have one of the last remaining pairs. See for yourself how refactoring fits into the TDD cycle, and when practiced mercilessly, allows beautiful, simple code to emerge.